March 23, 2011

OK, so I digress.  I'm listening to "Vogue" as I write this.

Everything I know about marketing I learned from the Material Girl.

After last week's HUGE news that regular regular Pepsi had lost its #2 position to Diet Coke, I thought wow, the Virgin Girl had finally gotten her revenge.  For those of you who had fallen asleep, Pepsi dumped Madonna in 1989 after it felt the heat from religious groups for sponsoring Madonna's "Like a Prayer" song.

So I'd like to think that Pepsi is finally paying for its sins.  And not just for wimping out on Madonna, my patron saint of marketing.  But quite simply for taking the lazy road on Hispanic marketing.

Several years ago, Pepsi decided that instead of capitalizing on its strengths on the urban front it was going to go head-to-head with Coca-Cola on all fronts including Hispanic.  Mistake #1: ignore your core strengths and you will pay dearly.

Let's get something straight.  Coca-Cola has been king in Latin America for ages, especially in Mexico.  So Coke, quite smartly has leveraged this potency with US Hispanics, recognizing to a large degree that the great majority of US Latinos are of Mexican ancestry.  And for years Coke has been beating Pepsi on the Hispanic front.

I will submit to anyone that Pepsi had a chance a few years ago if it had leveraged its urban strength.  It already enjoyed a healthy position with African-Americans vis-a-visa Coke, so why not capitalize on its urban African American strength, and go after urban bilingual, bicultural Latinos?

Instead it fell victim to the overtures of then Univision CEO Henry Cisneros and foolishly sponsored some Hispanic music countdown on Univision's sister network Telefutura.

Pepsi should have cultivated a beachhead with bicultural urban Latinos by buying instead the likes of mun2 and MTV3 BACK THEN!   No, it went after Spanish-dominant Hispanics who Coke pretty much has owned for decades.

To its credit, Pepsi's current brand stewards have brought in some savvy urban Latinos to help redress its past sins.  It's redeemed itself from last year's "yo sumo" campaign (which quite honestly I thought was some bicultural play on sumo wrestling or something to that effect).  I hope it's not too late.

So today Madonna is sitting pretty at 50+.  Coke is reigning supreme.  And Pepsi is #3.  And for the record and full-disclosure I'm a Diet Coke drinker.

Strategic errors have their consequences.


Was there right with you until you mentioned the cliches: Mun2 and MTV3. Neither have the audience necessary to sustain Pepsi's sales. But I'm there with you: abandon your core audience and you'll pay dearly.

Don Manny: Great post! At first I completely agreed with you, especially the salient point of, 'Yo Sumo'. I never understood that. Then, I agreed with with Marcelo. After that, I agreed with your counterpoint, especially the Nike/retail point. Interesting. I feel like I'm at a tennis game... Have a wonderful weekend, gentlemen... - hc -

Marcelo, thanks for your comment. You make a valid point but I wouldn't have limited myself to just the "cliches" of mun2 and MTV3. Also, as a good beverage marketer you not only have to consider delivery of eyeballs but delivery of drinks too. I don't have the exact numbers but if you were to find that out that each mun2 viewer consumed at a greater frequency, and more drinks per year, then it's conceivable that it would be a better option than Univision. Hispanics have provided Nike with tons of sneakers buys...with nary a penny spent on Univision. The reason? Nike spends tons of money on trade marketing, including Hispanic trade/retail. So to my previous point, mun2 and MTV3 buys would have been complemented by Hispanic trade marketing investments.

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